Already a member?

After barely moving on Monday, gold marched lower through the
rest of the last week as drums of war against Syria slowly faded.
Gold suffered sell-offs for four consecutive days as investors
followed fretting the prospects of war with an understanding it
looks much less in the cards. The yellow metal took a heavy
beating and ended the week in red.

The Week That Was

Gold prices closed flat on Monday as investors continued to
speculate on a U.S. military strike against Syria and prospects
of Fed's $85 billion a month bond buying program.

However, prices fell the next day as gold's safe-haven demand
waned on expectations that military intervention in Syria could
be avoided. Likelihood of a targeted U.S. attack ebbed on news
that Syria has welcomed Russia's proposal to put its chemical
weapons under international control.

Last week, the U.S. and Russia set aside their differences and
cut an agreement on a framework to seize and destroy Styria's
chemical weapons stockpile by the middle of next year. President
Obama asked Congress to delay the Senate vote on a planned
airstrike and said that such a move could be shelved if Syria
eventually gives up its chemical weapons. However, the President
is keeping the door open for using force, should diplomacy fail.

Gold's southern march continued on Wednesday as efforts to avert
war through diplomatic means remained in place, elevating
downside risk for the metal's prices. Traders who took long
positions in gold on hopes that the U.S. would attack Syria
continued to offload their positions.

Gold suffered its biggest loss for the week a day after upon
increased selling pressure amid prospects that the Fed will
divulge a tapering decision in a two-day Federal Open Market
Committee (FOMC) meeting that began yesterday. The expectations
were triggered by initial weekly jobless claims data. The Labor
Department revealed that the number of people filing for initial
unemployment benefits fell 31,000 to 292,000 (lowest since 2006),
below analysts' expectations of 330,000.

Gold's losing streak continued on Friday on speculations on the
outcome of the FOMC meeting (with increased odds of Fed tapering)
and the rumor that former Treasury Secretary Larry Summers would
be named the next Fed chief as the White House hunts for a
successor to Ben Bernanke, whose term ends this January. The
sell-off was driven by concerns that Summers would be more
hawkish on monetary policy than other potential candidates
including the incumbent Fed Vice Chairman Janet Yellen.

Gold prices (for December delivery) on the New York Mercantile
Exchange's Comex division closed at $1308.60 per troy ounce last
Friday, a 5.6% slide for the last week. Silver suffered a similar
fate and lost 9.1% for the week to close at $21.67 per ounce.
Both metals hit a four-week low during the week.

Gold and silver continue their bear market runs with prices
trending roughly 27% and 38% below their 52-week highs,
respectively. Gold prices (based on last Friday's close) are down
roughly 9% from their three-and-a-half month high of $1,433.31 an
ounce logged in August.

The
AMEX Gold Bugs Index
(
^HUI
) slipped down 8.6% last week while the
Philadelphia Gold and Silver Index
(
^XAU
), which includes both gold and silver stocks, sagged 7.1%. This
compares to a roughly 2% gain for the
S&P 500
(
^GSPC
).

Gold's fortunes hinge on developments surrounding Syria and Fed
tapering. Any possible military action on Syria augurs well for
the safe-haven demand of the metal. On the flip side, if the war
is eventually averted, gold prices would be under pressure.
Moreover, the Fed's decision on scaling back its stimulus will
heavily influence gold's near-term prospects.

Stocks in the News

On the corporate news front, striking workers at
Gold Fields
(
GFI
) returned to work at the South Deep mine after receiving a
two-year salary raise offer from the Chamber of Mines. Under the
deal, pay hike will be implemented retroactively from July 1,
2013. In the second year, employees will get further
inflation-linked raises.

South Africa's mining industry has been hobbled by a series of
labor strikes with other miners including AngloGold Ashanti and
Harmony Gold
(
HMY
) facing aggressive wage negotiations with unions.

In another development, Newmont is reportedly launching
commercial operations in the Eastern Region of its Akyem mine in
Ghana in October. The mine, which has estimated gold reserves of
7.7 million an ounce, is expected to produce up to 450,000 a year
in the first five years of its operating life. With Akyem coming
on stream, Newmont will have two projects (the other is Ahafo)
operating in Ghana.

Barrick Gold, at the Toronto mining conference, emphasized the
needs to rein in spending to maintain profitability amid an
uncertain gold market and setbacks associated with the delay in
its Pascua-Lama project in Chile. The gold giant, which has
already slashed roughly $2 billion in capital spending during
first-half 2013, has no plans to invest in new mines.

Gainers and Laggards

Stocks

Past Week

Trailing 6-Months

ABX

-7.13%

-36.51%

GG

-9.91%

-19.10%

FCX

+5.97%

0.00%

NEM

-7.33%

-28.75%

KGC

-6.50%

-34.09%

AEM

-9.54%

-31.47%

AU

-10.27%

-46.50%

SLW

-4.78%

-19.05%

What Lies Ahead?

Gold bugs anxiously await the results from today's critical FOMC
meeting to get clarity on the timing of winding down of the
economic stimulus. The market reckons a $10 billion-$15 billion
reduction in monthly bond purchases, which if eventually happens,
will dent gold prices which have benefited in recent years from
Fed's ultra-easy monetary policy that tends to raise the risk of
inflation.

Please note that once you make your selection, it will apply to all future visits to NASDAQ.com.
If, at any time, you are interested in reverting to our default settings, please select Default Setting above.

If you have any questions or encounter any issues in changing your default settings, please email isfeedback@nasdaq.com.

Please confirm your selection:

You have selected to change your default setting for the Quote Search. This will now be your default target page;
unless you change your configuration again, or you delete your
cookies. Are you sure you want to change your settings?